Nokia Siemens expects price erosion to continue

By Jennifer Tan

SINGAPORE (Reuters) - Telecoms equipment maker Nokia Siemens Networks said on Thursday it did not expect fierce competition for telecoms network gear contracts to ease, as rivals continued to slash prices.

"It's still an extremely competitive market, and vendors are not making huge profits," Christian Fredrikson, head of Nokia Siemens Networks Asia Pacific, told Reuters in an interview. "There's price erosion all the time -- it's not easing in any way."

Ericsson, Nokia Siemens and Alcatel-Lucent are the leading players in the telecoms network market, but have been increasingly challenged by Chinese vendors, including Huawei Technologies and ZTE Corp in the last few years.

With aggressive pricing, Huawei took the No. 4 spot in the global telecom network gear market in the January-March quarter, bypassing Nortel Networks and Motorola, according to research firm Dell'Oro.

Ericsson had predicted recently that the market was set to improve and price competition likely to ease.

Fredrikson said Nokia Siemens would not compete on price alone. The company has walked away from several deals in the past as it focused on improving profit margins and cash flow.

"We will use rational behaviour all the time -- that's the only way to play," he added.

About 3.3 billion people globally now are connected through mobile devices or fixed-line, with this figure expected to rise to 5 billion by 2015.